Friday, July 28, 2023

Fed Nudging Rates Up Again

The federal reserve seems to want a recession. It is clear that they managed to slow the rampaging economy down and inflation is still around but not out of control like it was. So why is the Fed hitting the brakes again? The short answer is: who the hell knows? 

Home buyers should talk to their loan officers and see if this latest round of rate hikes is going to impact any mortgages in process. If you are locked you are good to go, but if not this could pose a problem. Talk to your loan pro and find out.

The real estate market seems busy if you're a buyer but honestly sales are way down. These rates have created the problem I have discussed ad nauseam on this site. Fewer buyers and even fewer sellers. Meanwhile in out local market some 2000 agents are competing for half as many sales. We should see a large exodus of under performing agents over the next couple of months.

Meanwhile buyers should take a deep breath and start throwing offers out there because they could be priced out of the market if rates rise too much higher. Sellers are likely going to double down on staying put with their super low mortgages they took out a few years ago in the threes and some in the twos. For agents it's time to buckle up buttercup, we are in for a tight ride to close out 2023.

Friday, July 21, 2023

Inventory Reported as Lowest in Months, Prices Steady

The local MLS reported tighter inventory levels and usually that means rising prices.  But prices are not rising, at least not much. Why is that? Keeping with classic economics of supply and demand we continue to have a short supply of homes but also a short supply of buyers. So supply is tight but demand is low. Yes folks demand is low, but we all know that demand isn't really low, right? of course we do, so what gives? Demand is being suppressed with higher interest rates that have eliminated many buyers from making moves after an extended period of ridiculously low rates. Homeowners that are sitting on mortgages with the lowest rates in the history of 30 year loans are hesitant to sell. Remember that a very large percentage of real estate demand comes from people selling their current home and moving into another home. 

What's really driving the demand side now is almost exclusively entry level first time buyers and relocations. We are not seeing a lot of move-up demand. Move-up is when a homeowner wants to sell their home and buy a larger or superior home. That market has been reduced to a crawl because those potential move-up buyers are sitting on a 2.5-3% mortgage and if they move-up their new mortgage will be 6.5-7%. It makes it less affordable and it's psychologically hard to swallow. 

So we have a compressed market with fewer sales but it's acting like a roaring market with multiple offers on well priced homes. It's a bit of a mirage actually. The good news is that instead of crashing the market, these higher rates have managed to simply slow it down a bit and after a period of adjustment we should return to more normal demand levels. 

Here's to a great second half of 2023.

Friday, July 14, 2023

Can Clark County Continue to Expand?

Clark County is the only county in the Portland-Vancouver Metro Area that is seeing strong growth in both population and jobs. I mentioned that Clark County is dominating the region in a recent article and that remains true. But can it continue if the greater region is not also expanding? 

We are getting our growth from multiple sources. There is some Portland flight right now and I think we all know why. There is also pressure coming from the Puget Sound region as the cost of living and cost of doing business has gotten extreme up there. Vancouver in particular is seeing a lot of people and businesses move in from greater Seattle. We are also still drawing people and businesses from outside the Pacific Northwest as well. We have a diverse source of growth and that may be the very reason we can continue moving in a positive direction even if things are slowing down in the Oregon counties of the Metro Area.

Vancouver's continued growth will drive the rest of the county as that city is getting huge infusions of cash into he local economy with giant mid-rise and high-rise projects. The city government needs to keep a careful eye on the local crime rate and homeless situation as we look good contrasted with Portland now. If we start looking like Portland then all bets are off and the money will melt away like ice cream on the 4th of July.

Our local real estate market benefits from all this growth as more people are moving here, and more businesses are coming in. As long as that positive economic pressure continues we should remain healthy in real estate. Clark County can and likely will continue to see strong economic growth soloing as our local elected officials continue to look at Portland and then, NOT DO THAT.